to extricate yourself from an impossible situation, where there is very little or no hope for improvement.

similiar to cashing in your chips, however, when one cuts their losses, it usually means that they are walking away with nothing to show for their efforts, and are getting out before they have to endure even more loss.
cutting your losses:

The U.S. Government eventually decided to cut its losses with regard to the Vietnam War, and by the early 1970s withdrew all of its military forces from Southeast Asia.
by Bungalow Bill October 13, 2005
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